LCEC works with an independent consulting firm to complete a Cost of Service Study, analyzing the costs of service for our customer groups, including residential and business customers. The study incorporates all of the LCEC costs to provide electric service, including a minimum rate of return required by our lenders, and then allocates those components as equitably as possible to all customers.
Customer Charge – Flat charge encompassing distribution costs as well as metering and billing.
Demand Charge – Flat rate calculated against the customer’s peak demand over the current billing period to recover capacity infrastructure costs. Also includes:
A Power Factor Adjustment (not currently in use), which calculates additional demand charges for each kW, when the customer’s power factor falls below 90 percent.
A Primary Service Discount, which provides a discount to the demand charge for customers who have invested in the purchase of their own transformer equipment.
A Demand Ratchet Component, which ensures that a minimum of 70 percent of a customer’s peak capacity costs are recovered even during times of low kWh usage.
Energy Charge – Inverted block rate and flat rates currently recovering approximately 2/3 of the LCEC purchased power costs.
Load Management Credits – Monthly billing rebate for a customer who has enrolled in the LCEC demand side management program; requires a minimum consumption of 500 kWh during the current billing period.
Interruptible Credit – Monthly rebate utilized by larger industrial customers that agree to shed a pre-determined and contracted minimum load at the request of LCEC during peak usage periods.
Power Cost Adjustment – Adjustment component utilized to ensure recovery of wholesale power costs.
Net Meter Rider – Rate components that allow for a net metering calculation where customer-generated kWh photovoltaic power is subtracted from the power delivered to them by LCEC.
Outdoor Lighting – Flat rates designed to recover costs for security lights, traffic signals, district street lighting, and decorative lighting purchased from LCEC.
The structure of the residential rates incorporates a fixed customer charge, a three-tiered inverted block rate, and a power cost adjustment. Below is the chart to indicate how LCEC rates compare with neighboring utilities.
The Benefits of a Three-Tiered Block Rate:
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